Obamacare Again? Senate Tax Plan Aims to Repeal Mandate

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The Obamacare repeal debate is on again. Senate Republicans decided on Tuesday to include the elimination of the Affordable Care Act’s individual mandate in their tax plan, a risky move that would raise hundreds of billions of dollars to help pay for their desired tax cuts but is also sure to reignite intense clashes over health care coverage. Here’s a quick look at this latest twist in the tax reform effort:

Why They’re Doing It: Repealing the mandate, which requires individuals to buy health insurance or pay a penalty, helps solve the difficult math problems Senate tax-writers faced. The Senate tax bill can add up to $1.5 trillion to the debt over 10 years, and it can’t add to the deficit after that period. President Trump and some Senate Republicans had urged that the mandate repeal be included in the tax plan since it saves a projected $338 billion over 10 years, according to the Congressional Budget Office.

“Repealing the mandate pays for more tax cuts for working families and protects them from being fined by the IRS for not being able to afford insurance that Obamacare made unaffordable in the first place,” Sen. Tom Cotton (R-AR), who had proposed the move, said after the decision was announced. And if the repeal passes as part of a tax cut package, Trump and congressional Republicans would deliver on two promises to voters in one bill.

What It Means: Repealing the mandate may help Republicans chalk up a big win on taxes, but it also comes at a cost. The move raises revenue because it would lead to 13 million fewer people having health insurance, according to the CBO, and thus reduces the amount the government must shell out for insurance subsidies and care. Analysts also warn that, without the mandate, premiums will rise and some insurers might not participate in Obamacare markets that require them to cover pre-existing conditions. “Eliminating the individual mandate by itself likely will result in a significant increase in premiums, which would in turn substantially increase the number of uninsured Americans,” a coalition of insurers, hospitals and doctors wrote in a letter to congressional leaders on Tuesday.

Those expected effects carry significant political risk. For one thing, it could reawaken the liberal base that mobilized so effectively against Obamacare repeal and turn their focus to the tax bill. Democratic leaders are already slamming the decision. "Republicans just can’t help themselves,” Sen. Chuck Schumer said. “They’re so determined to provide tax giveaways to the rich that they’re willing to raise premiums on millions of middle-class Americans and kick 13 million people off their health care." Liberal policy expert Michael Linden tweeted, “Reducing the corporate tax rate to 23% instead of 20% generates the SAME savings as repealing the ACA mandate. They could cut taxes for corporates just a little less, but instead they're cutting health care.”

Will It Pass? A “skinny” Obamacare repeal bill that would have eliminated the individual mandate failed in the Senate in July when Republican Sens. John McCain, Lisa Murkowski and Susan Collins voted against it. But Senate Majority Leader Mitch McConnell told reporters that including the repeal provision would make it easier for the tax bill to pass. As part of the deal, the Senate would also reportedly vote on another bill to restore federal payments to insurers that the president halted last month. Sen. John Thune (R-SD) said that a whip count had been done and expressed confidence that Republicans had the 50 votes they need.

As editor in chief, Yuval Rosenberg oversees all aspects of The Fiscal Times' website and email newsletter. His writing has appeared in publications including BusinessWeek, CNBC.com, CNNMoney.com, Fast Company, Fortune, Newsweek, Money and Time.